Reliance Jio’s explanation on Summer Surprise offer not satisfactory: Trai

NEW DELHI: The Telecom Regulatory Authority of India (Trai) said Reliance Jio Infocomm's Summer Surprise plan, which offered complimentary benefits to its subscribers for three months, did not fit into the "regulatory framework", prompting it to order the company to stop the plan.

"On April 1, we had asked for certain details from Jio and then on April 5 had called a meeting. We have discussed the offer in which they are asking customers to recharge with Rs 303 (or more)," Sudhir Gupta, secretary, Trai, told reporters on Friday.

"The explanation which was given to us by Reliance Jio was not satisfactory and they were not able to explain where this complimentary special benefit fits into the present regulatory framework," he said.

Officials at the Mukesh Ambani-owned company reiterated that the offer was legally compliant but Jio would be following with the order, which was first conveyed verbally on Thursday.

Under the offer announced on March 31, all Jio Prime members making their first recharge of Rs 303 (or more) by April 15 got three more months of free voice and data services, besides access to other Jio apps. Ambani had announced Prime membership on February 21 for a one-time fee of Rs 99.

The Prime membership, available for one year, gave customers the option to choose from multiple data packs starting from Rs 149 onwards.



While the move dashes the company's aim of rapidly adding to its subscriber base, more rational pricing will likely be restored in an industry plagued by a rate war triggered by Jio's entry, which has led to a sharp fall in government revenue from licence fees and spectrum usage charges.

Trai appears to have taken suo moto note of Jio's latest offer as Gupta said the company hadn't filed the new tariff scheme with the regulator, which it is mandated to do within seven days after launching the plan.

"The new offer is a special benefit which is not falling into the regulatory framework," the official said. "We are saying to stop it in the shortest possible time and it can be few hours, a day or a day and half but it can’t be April 15."

Jio said it is in the process of complying with the advice and will be withdrawing the benefits as soon as operationally feasible, "over the next few days."

Reliance Digital staff in Delhi and Mumbai stores told customers that the offer will be wound up by the end of Friday.

"There is no way to advertise since overnight printing would not have been possible. So, we are resorting to writing messages on placards and putting them up," a Mumbai retailer said.

Gupta clarified that subscribers who have already enrolled for Jio Prime membership and the latest offer would continue to get voice and data benefits till June.

A senior executive at one of India's top telcos said that Jio should have been told to stop the offer with immediate effect.

"ACCELERATED RUSH"
In a report, brokerage JPMorgan said that "appropriate messaging by RJio on its withdrawal of this free offer scheme (before the earlier deadline of April 15) is likely to result in an accelerated rush from consumers for its free offer scheme. Thus, even as RJio has agreed to wind down Summer Surprise early, before April 15, it may not really lose a proportion of subscribers (worth calling out) from what could have been its potential subbase with the earlier deadline."

On current TV campaigns and text messages to Jio subscribers asking them to quickly enroll for Prime membership, Gupta said Trai didn’t have a policing role. "We believe that they (Jio) will stop TV campaigns."

Experts have cautioned that the latest offer, coming on the back of two successive promotional offers stretching from September 5 to March 31, will further bleed the industry amid falling revenue and rising capex requirements, with debt ballooning to Rs 4.85 lakh crore.

The telecom department has already flagged a nearly 30% sequential slump in licence fees that telcos will pay the government for the March quarter, mainly due to the promotional offers. It has blamed Trai for allowing the promotional offers to continue beyond the mandated 90 days, leading to the financial stress on telcos. Trai has said it had played by the rules in allowing Jio's two successive offers.

Gupta on Friday reiterated the regulator's stance that it did not find any violation in the previous two promotions– Welcome Offer and Happy New Year.